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Wind power capacity set to rise after FM's incentive

Jul 28
09:07 2014

CHENNAI: In a move that will boost the wind power marketin India, finance minister Arun Jaitley has said that theAccelerated Depreciation Scheme would be restored for the wind industry.

Under the scheme, companies which put up windmills can write off 80% of the project costs as depreciation in the first year of putting up the windmill, and thus save taxes.

The scheme launched in the 1990s was withdrawn in 2012, leading to a major fall in capacity additions of wind power in India. Across India, and in Tamil Nadu particularly, which is the state with the highest capacity of windmills, the AD scheme is what drove the wind power movement as several companies like textile mills had put up windmills to save taxes and also generate wind power for their own use.

Once the reinstatement of the scheme is officially notified, wind power generation would increase by 1,000 MW resulting from an additional Rs 7,000 crore investment in the sector.

"The industry was expecting to add about 2, 000 megawatt (MW) wind capacity this year and this would result in an additional 1, 000 MW of capacity across the country," said, Madhusudan Khemka, MD, Regen PowerTech, and chairman of the Indian Wind Turbine Manufacturers Association. About 1, 700 MW of wind capacity was added in 2013, down from 2, 300 MW in 2012. "About 800 MW would come in by the end of this year, most of it in the captive consumption space, and there is sufficient manufacturing capacity to meet this increase in demand, " Ramesh Kymal, said CMD of wind turbine maker Gamesa India.

"Tamil Nadu alone has the capacity to take an additional 7, 000 MW as per our feasibility studies. Land is available and wind flows are high so a lot of our members would add capacity this year," said K Venkatachalam, chief adviser of Tamil Nadu Spinning Mills Association, which owns 3, 000 MW of windmills in the state.

The availability of transmission lines continues to be an issue, but the commissioning of a transmission line from southern Tamil Nadu to Chennai will help improve the situation, companies say.

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